Survey Shows Data Breaches Erode Customer Loyalty

Data breaches have a significant influence on whether a customer will interact with an organisation again, according to research from US information security specialist SafeNet.

The company surveyed over 4,500 adults across five major global economies – the US, the UK, Germany, Japan, and Australia. It found that 65% of respondents insisted they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach where financial data such as credit card information, a bank account number, or associated login details was stolen.

Data breaches involving personal identifiable information were deemed to be slightly less harmful to an organisation than breaches involving financial data, with 57% of respondents indicating they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach of this nature.

SafeNet also released its Q2 Breach Level Index, which recorded a total of 237 data breaches occurring between April and June 2014, which exposed more than 175m personal and financial information records worldwide. Among the companies targeted were AOL, Dominos, eBay, Office, and Spotify.

The research also indicated that only half of adults surveyed feel that companies take the protection and security of customer data seriously enough

“Data breaches are not just breaches of security,” said Tsion Gonen, chief strategy officer, SafeNet. “They’re also breaches of trust between companies and their customers, and can result in not only negative publicity but lost business, lawsuits, and fines that can threaten the viability of the business.

“For organisations that fail to address their security vulnerabilities, the problem is only going to get worse as stricter regulations governing the reporting of data breaches are introduced across the world, making breaches more visible to the public. So companies need to do all that they can to keep customer data protected.

“With the increasing frequency and size of data breaches, it’s clear that being breached is inevitable and perhaps only a matter of time. Cyber criminals are going after easier targets, and that is frequently personal data that is often unencrypted.

“With the implications clear, it’s time for companies to start thinking about protecting more of that data with strong encryption and multi-factor authentication. Only those organisations that adopt a ‘secure breach’ approach and ensure that all customer data remains encrypted will find themselves able to retain their customers should a data breach occur.”

6 views

Related reading

Far and away, the largest financial market on the planet is the foreign exchange currencies market, where on average individuals and organisations trade more than $5 trillion daily. In the FX world, the ability to master the market isn't considered a luxury for treasury officers–it's a necessity.

Using data for predictive analytics is the future of banking success, argued Jean-Laurent Bonnafé, CEO of BNP Paribas, in his session on how the bank is reinventing its approach to innovate with and for corporates.

The payments landscape for corporates hasn’t gotten much clearer over the last decade, but global multi-banking continues to grow. Twenty-three per cent of corporates reportedly originate payments with 11 or more banks, and more than 24% operate within each of the major world regions.